The much needed reforms in state owned enterprises has kick-started under the auspices of the Short to Medium Term State Enterprises Reform Framework. 41 of the 107 State Enterprises and Parastatals (SEPs) will be restructured in the first phase of this reform process.  The process will see 13 enterprises being privatised and some 12 being listed on the Zimbabwe Stock Exchange while some will be merged and 4 entities have a possibility of being liquidated. These reforms are coming in as part of government efforts towards making Zimbabwe a middle income economy by 2030 with a per-capita GDP of $3500. Interestingly, in the 1990s these SEPs contributed about 40% of the country`s GDP but fortunes changed overtime. Below is a brief view of what the restructuring process entails.


Analysts have been vocal in advocating for the privatisation of a number of SEPs but, will this be the best way to ensure productivity in these entities? May be yes! Given the number of times SEPs have been caught up in mismanagement allegations, one might advocate for privatisation as a sure way to bring sanity in these entities. Entities going the privatisation route include Zupco, Agribank and the Infrastructural Development Bank of Zimbabwe(IDBZ). Hopefully this will go a long way in turning the fortunes of these entities if they are privatised. But given the misfortunes of Kukura Kurerwa Bus Company, will there be a willing private player to take a firm like Zupco and make it a household name? Only time will tell!

Listing on the Zimbabwe Stock Exchange

Opposed to having the hand of the government feeding its enterprises with capital injection every now and then, listing on the Zimbabwe Stock Exchange (ZSE) might make it easy to raise the much needed capital. Companies like Willowvale Motor Industries and Petrotrade and 10 other firms will find themselves listed on the ZSE and this promises to come with a number of benefits.  Apart from raising funds through the selling of shares, a fresh crop of brains might find its way into the respective board rooms and this might go a long way in turning the fortunes these respective entities. One advantage of this is the ability to raise the capital needed for these companies to become fully functional.

Merging the SEPs

In line with attempts at dealing with the bloated wage bill and duplicated roles, merging some SEPs will go a long way in dealing with unnecessary expenses for the government. Part of the reforms are calling for entities such as the Postal Telecommunications Regulatory Authority (Potraz) and Broadcasting Authority of Zimbabwe (BAZ) to be merged into a single telecommunications regulator. Africom, Powertell and ZARNet will be merged into one company. Other benefits expected from the mergers include economies of scale and greater efficiency. Perhaps a number of business owners can learn a thing or two from this approach if they so want to improve their business systems.

Liquidation of loss making enterprises

Four SEPs will be liquidated as part of government efforts to deal with none performing enterprises. Audits and reports were constantly pointing at a number of entities which were continuously draining treasury with losses year after year. According to the 2011-15 SEPs performance report, losses amounting to $309, 5 million were made by majority of state enterprises and only 12 entities managed to bring in profits for the government. In 2016, about 38 SEPs incurred combined losses amounting to $270million and this was out of the 93 audited companies. To this effect, some argue that SEPs had degenerated to hubs of corruption and embezzlement of company funds thus aiding the failure of these entities. On such backgrounds, it would stand to reason that some entities need to be liquidated. Companies to be liquidated include National Glass Industries and Kingstons.

Some of the SEPs will be adopted by line ministries eg New Ziana and National Liquor licencing. Others will be partially privatised eg GMB. Hopefully these efforts will go a long way in changing the fortunes of our economy.

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